- They built spec homes, then brought in fake buyers. The fake buyers borrowed more than $25 Million to buy these homes. The "solution" of having the builder buy its own houses flooded their business with money to keep it a float, which in turn let them build even more houses. Fortunately the declining real estate market caught up with them and unveiled the scheme.
- The fake buyers were friends and family who bought the homes to obtain the loans. One buyer bought 46 homes at the tune of $20 Million between 2004-2007.
- A bank officer was enlisted to falsify verifications of bank deposits
- An appraiser was enlisted to inflate and over-value the property appraisals.
- A closing agent was enlisted to forge signatures on purchase documents
The real losers are the people in these neighborhoods that bought homes at inflated values and now are seeing surrounding homes being auctioned off at sheriff sales. In New Prague, many homes have already been auctioned off. Other buyers have entered into leases with the option to buy, and are facing eviction from new owners.
It will be interested to see how this all unfolds in the next couple of months. The Parishes have all plead guilty and are currently awaiting sentencing. They could get 5-15 years for their offenses and will have to pay back millions to the bank and affected home owners. People always get their comeuppance. It is nice to see justice served.
Just remember not to group this company in with all the great builders out in the market place, or to have a bad impression on appraisers, closing agents, bank officers, or real estate agents. There are more good people out there than bad...it is just that the media likes to report on the bad more than the good.